Wednesday, March 5, 2008

AMA About to Sell Pro Racing?

Cycle News is reporting today the sale of the road racing properties of AMA Pro Racing will be announced tomorrow. The reported buyer is a Daytona, FL investment group led by Jim France, president of International Speedway Corporation.

While the France family has its detractors, there is very little downside to this purchase if it happens. Given the state of the AMA, aligning motorcycle racing with arguably motorsport's most successful business model can only be a step up. Plus, the France family has shown a decided interest in and understanding of the need to maintain a healthy grass roots involvement through their "Come Home to NASCAR Dirt Track" promotion effort.

It was earlier reported that all the racing properties -- including motocross, supercross, ATV, and offroad -- would be sold as a unit. this no longer appears to be the case. Not sure if that's good or bad. Professional Motocross could benefit from a business model like NASCAR. For more on this topic see AMA Motocross Is Not NASCAR, The Cost of Inner Conflict, and The Nonprofit Professional.

Thursday, February 7, 2008

Ducati Profile

Getting detailed financial info on motorcycle manufacturers is difficult. The Big Four Japanese are vertically-integrated conglomerates who make everything from bullet trains and ships to pianos and keyboards. They don’t usually break out motorcycle sales in their financials. Ditto for BMW – they don’t separate cars and motorcycles. The small companies – Ducati, Piaggio, etc. are often traded on foreign exchanges with limited disclosure rules or have large percentages of their stock held by private interests. US-based Harley-Davidson is about the only pure motorcycle manufacturer where we can track true financials. This makes it hard for someone like me to assess trends and get any real feel for what’s happening in terms of industry economics, so it’s really helpful when someone publishes inside data on a specific company.

Alan Cathcart had a brief writeup on Buell and Ducati in the January 23 issue of Cycle News that had some interesting data on Ducati. I record it here for future reference.

Outgoing Ducati President/CEO Federico Minoli engineered the talks between H-D and Ducati that had H-D looking seriously at acquiring the Italian marque in late 2007. The deal was squashed by the Bonomi family, who controls Ducati via a 30%-minus-one-share equity stake owned by their private equity firm Investindustrial.

According to Cathcart Ducati’s revenues for the first nine months of 2007 showed a 43% increase over the same period in 2006:

H-D's numbers have gone in the opposite direction, with sales mirroring the overall slump in the US economy and projected 2008 numbers being even worse. Interestingly, the two companies are apparently still talking and a future merger is not out of the question. As we have noted here before, big companies need to get bigger in order to remain competitive, and consolidation is the natural path in all industries. Big companies also have trouble innovating, and tend toward buying up innovation rather than developing it on their own. In the end this reduces overall choice in the marketplace, providing us – the riding public – with largely identical machines that are just branded differently.

Saturday, February 2, 2008

Sarah Whitmore On the Racier Side of Supercross

Progress requires compromise. Advancement requires sacrifice. These time-honored platitudes are ingrained in most of us from childhood. To reach any worthwhile goal you often have to give up things you hold dear. Achieving mainstream acceptance is a goal for the motocross community, and the pursuit of that goal has caused us to gradually give up more and more of what we once held to be inherent truths about our sport.

In her latest blog post Sarah Whitmore shares her distaste for the racier side of Supercross.

Speaking of Supercross I am getting a little annoyed at all of the "main event" board and "30 second" board girls. Not to mention every energy drink company is in some huge competition to see who can have the most scantily clad girls on display. Its bad enough when these girls are getting paid to dress like this but then there are fans walking around wearing less than what I wear to the beach.

As a twenty-something woman and one of the top female motocross racers in the country Sarah speaks with some authority on this issue. Unfortunately, she has made one flawed assumption – that Supercross is a family sport. It is not. I wish it were, but Supercross is our (the industry, the racers, the broader MX community) shot at hitting the big time. And because we are all slavishly in pursuit of that magical, mythical pinnacle of fame and fortune we have pretty much sacrificed any tie we had to our past legacy.

The racy aspect of Supercross is much more likely to increase than it is to regress to any family values approach. As I wrote a few weeks back regarding the Leticia Cline incident, hotties are a part of getting mainstreamed. Sex sells. In the 18-34 male demographic for which Supercross has been manufactured sex sells supremely. And selling is what LiveNation is all about.

There may be one, perhaps even two, people inside LiveNation who actually care about motocross and Supercross. They are likely the guys working directly in the sport, managing the ground-level operations. But let's not make the mistake of thinking that there is any passion at all at the executive or Board levels. It's about money. Period.

If you want to see one possible future for Supercross watch an episode of NOPI TunerVision, or go to a NOPI Nationals event. They have racing. It's a backdrop to car shows, jello wrestling, soap suds dance orgies, and nearly-naked bikini contests. Not that I have a problem with any of these things. They just are. And if Sarah wants a glimpse of what her future may hold she can visit bikiniracer.com. Sex is what the 18-34 male demographic wants. Action sports and sex. It sells. Welcome to the mainstream.

Monday, December 17, 2007

Employees Revolt Over AMA Firings

Boy, things got pretty heated over the AMA firings last week. Cycle News reports on two separate, strongly-worded letters from interested parties. The first, from former AMA president Ed Youngblood (read the entire letter here) indicates Ed is really pissed:

[...]

In my opinion, the current regime is monstrous, and I am simply dumbfounded that the AMA Board of Directors seems tolerant of this style of management, if not complicit. It has caused me great pain to watch the deterioration of the AMA, but I expect my unhappiness is nothing compared to that of the employees, volunteers, and supporters who have been directly affected by it. There is very little I can do about this situation except cease to be a party to it in any direct or indirect way.

[...]

The second letter, from AMA Superbike Media Manager Larry Lawrence, says AMA personnel are in "open revolt" (read the entire letter here):

[More...]

Friday, December 14, 2007

Are We Really Ready for Mainstreaming?

I'm catching up on stuff from around the world of MX/SX today, after a few hard weeks of business travel. Ran across this post regarding SX chic extraordinarie Leticia Cline over at Blogandt. It's a week old and not really news anymore, but it's kinda funny. The upshot is Ms. Leticia - Playboy bunny, SX 30-second girl, RacerX Motocross Show cohost, etc. - appeared on Howard Stern. The folks at GNCC, who were considering using Leticia as part of their '08 marketing campaign, decided to use someone else. Leticia's appearance on Stern was a factor (probably not the only factor) in the decision. Barage of hateful e-mail ensues from Stern fans blasting the GNCC.

My opinion: Leticia is a professional hottie. We like hotties. Hotties and motorcycles are as inseparable as rock stars and genital herpes. But motorcycling is a family sport, right? That's what we all say - great fun for the whole family. You meet the nicest people on a Honda. Yada yada yada. Hotties. Family. Hmm...

GNCC is entitled to pick whoever they want to promote their series. People get chosen, or not, for all kinds of reasons. And professional sports organizations have all kinds of behavior and morals clauses in their contracts with athletes. But Leticia is on the fast path for professional hotties. That path is inherently in conflict with the family-first image we often want to promote. So what do we do? These are really muddy waters...

Why All The Dirt Bikes Look the Same

In his excellent book Market Domination author Steve Hannaford explores how consolidation in an industry leads to conversion between erstwhile “competing” products and ultimately reduces choice for customers:

Competitive differences tend to narrow over time, as they must when companies are trying to keep up with better selling rivals. When markets are dominated by a few companies, the consequence is a notable sameness among the big players and their products. Erstwhile competitors become increasingly similar, in strategy and in their impact on society. We might call this a side effect of competition for market dominance, because it is not directly part of the high-level financial struggles that motivate the market but is almost incidental to the bigger issues. Nevertheless, it may have a direct impact on our daily life.

As Hannaford notes, this is not to argue there is no difference in handling between a Toyota Camry and a Ford Taurus (or in our case the Honda CRF450R and the Suzuki RM-Z450.) But it’s almost certain that gap is narrowing. If you go back to the 1950s and 1960s you can see wide variety in both style and approach to offroad motorcycles. In the 1970s the technology wars began and the variety in modifications, experiments, and technologies was explosive. But by the mid-1980s most of the variety had been shuffled out of the dirt bike market. The Japanese, with their big conglomerates (making automobiles, ships, trains, power equipment, etc.) had the resources to match and absorb every innovation made by a competitor, and the dollars to out market them. Again, from Market Domination:

Certainly, originality can be a plus. But as oligopolies tighten, rivals have the means and interest to match every competitors breakthrough. The comparative advantage of any original move is short-lived, readily imitated. As we have seen in Chapter 4, real, disruptive innovation can create problems for bigger companies. Recognizing and adopting useful, bite-size innovations, however, is something many market-leading companies are really expert at.

What they are also expert at is killing any disruptive innovation – either through buying up the innovator or simply burying it through media and marketing. Within a few short years the real choices for motorcycle customers had dropped from dozens to a handful. Today the motorcycle market is dominated by six companies. That the products are all the same is apparent every time you read a bike test in a modern magazine and one of the first features they list is bold new graphics. 

How sad is that? Bold new graphics are what you’d expect to read about a new Volkswagen or maybe the latest little import shoe-box car. But certainly not a race bike. Style over substance is the marquee indicator that the products are really all the same. Over time customers become conditioned to the sameness, accepting it without any consideration at all. From the market’s perspective there are many advantages to the sameness – widespread availability of product and parts, ubiquitous support, and much less thinking required in product decisions. How many motorcycle dealerships are now Honda/Yamaha/Suzuki/Kawasaki/KTM dealers, with real expertise in none of them?

There is also security. When every product is similar there is little chance of getting a lemon, and there is comfort in knowing that a million other people bought the same thing. We are soothed by this lack of risk, hypnotized by the flashy ads, and anesthetized by the monotonous tone of big companies telling us how smart we are.

But there is real risk in this apathy. We have ceded real control of our future to a handful of individuals who decide what is and is not important. Our interests are only addressed to the extent they align with the interests of the sellers. And this is not good.

Motorcycling is an individual pursuit. It’s an individual exercise. Yes, we are a community, but a community of individuals. Do we really want our future decided by someone else?